Youtube Video

Summary published at 12/31/2024

🌟 Howard Marks emphasizes that markets can remain irrational longer than you can remain solvent. Betting against an irrational market can lead to significant losses.

👋 Good morning! I’m Katie Cotch, CIO of Public Equities at Goldman Sachs Asset Management, here with Howard Marks, co-chairman of Oaktree Capital.

📈 Market Cycles: Howard discusses the importance of understanding market cycles rather than relying on economic forecasts. He believes in taking the temperature of the market to gauge whether it is overheated or frigid.

💰 In 2008, Howard and his partner Bruce invested $1 billion in distressed debt when others were fleeing the market. They recognized the opportunity amidst the chaos following the bankruptcy of Lehman Brothers.

🔍 Howard notes that while predictions are difficult, understanding current conditions is crucial. He emphasizes the importance of being cautious when the market is overheated.

📊 Tech Bubble: In January 2000, Howard wrote a memo titled “bubble.com”, highlighting the unsustainable business models of tech companies. He stresses that while technology can change the world, profitability is essential.

💡 Howard reflects on his experience in high-yield bonds, stating, “It’s not what you buy, it’s what you pay.” He believes success in investing comes from buying things well, not just buying good things.

📝 In his first book, Howard includes a checklist for assessing market sentiment. He believes that if sentiment is too positive, it’s time to be cautious.

📉 Currently, Howard assesses the market as being in moderate territory. He believes valuations are reasonable relative to interest rates, but acknowledges that excesses have been driven out recently.

🤔 Howard emphasizes the importance of emotional control in investing. He advises against letting fear dictate decisions, especially during market downturns.

💪 He believes that successful investing requires intellectual humility and the ability to recognize that you don’t know everything. This mindset helps in making better investment decisions.

📉 On risk management, Howard argues that quantitative tools are not sufficient for measuring risk. He believes that subjective judgment is crucial in assessing potential negative events.

📚 Howard shares a lesson from his early career about skepticism in investing. He learned that there are no sure things and emphasizes the importance of being cautious.

🌱 He concludes that success can lead to complacency, while failures often teach valuable lessons. “Experience is what you get when you don’t get what you want.”

🤝 Howard expresses gratitude for the opportunity to share his insights, stating that helping others understand investing is rewarding.

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